Today's reports on Pres. Obama's proposal to limit executive pay in bailout companies reminded me of Cornell Prof. Robert H. Frank's books Winner Take All Society and Luxury Fever. More than a decade ago, Bob warned of the dangers of skyrocketing compensation for top entertainment and business figures. He also offered some solutions. Alas, those solutions were largely dismissed as being impractical, given the political and cultural obstacles.With the excesses of Wall Street, bankers, et al, having hurt us all, those obstacles might now be addressed. We should look to our scholars for answers they've been developing for years and not just to political insiders who are flailing around with our trillions of taxes and increased debt.
I believe the government will certainly set up some terms and conditions before the public money goes to Wall Street. In addition, the government is becoming the largest or major shareholder of banks. This leads to a question: Should the banks be nationalized? Or, should the government intervene the day-to-day operation of the banks, such as telling them to buy or not to buy a private jet?
ReplyDeleteBack in school, we were taught that businesses that were so big that people relied on heavily (like utility companies), should be regulated by government. With the Reagan years came the simplistic, ideological demand that we reduce government and deregulate everything. Now the demagogic advocates and beneficiaries of these policies are wanting their cake, having eaten it too. We forgot - or perhaps, simply ignored -basic teachings about regulation.
ReplyDeleteInstead of thrashing through the emotional political ping pong of instant demagogic solutions, we should work with scholars who have really thought about and done research on these situations. Let's consult the economists, of course, but also historians, who might remind us of how the Red Guard destroyed a generation of Chinese with their simplistic ideological followings of Mao's dictums against the Four Olds.